SUMMARY
- Qualcomm extends 5G modem supply to Apple till 2026, sidelining rumors of Apple's self-reliance.
- Apple's contributions to Qualcomm's revenue are undeniable, accounting for 21% in 2022.
- Despite a bright present, Qualcomm foresees a reduced role in Apple’s 2026 smartphone release.
Qualcomm announced on Monday that they'll be Apple's go-to for 5G modems until 2026. Despite murmurs from Wall Street and even within Qualcomm hinting at Apple's plans to develop its own 5G modems by 2024, this recent revelation seems to have put those rumors to bed.
The partnership promises a significant boost to Qualcomm's handset business, which recently posted an impressive $5.26 billion in quarterly sales. Let's not forget, Apple accounts for a whopping 21% of Qualcomm's 2022 revenue, as per UBS estimates. That's a cool $44.2 billion!
Yes, Apple's been playing around with the idea of crafting its own modems. They even snagged Intel’s smartphone modem team in 2019 for that very purpose. However, experts believe Apple's switch away from Qualcomm might be trickier than anticipated, given the sophistication of Qualcomm’s technology.
Apart from modems, Qualcomm's wallet also enjoys a steady influx from cellular licensing fees collected from Apple. We're talking about a smooth $1.9 billion in 2022. They've also got a royalty agreement that spans six years, the outcome of a legal tiff over royalties they managed to settle in 2019.
But it's not all roses for Qualcomm. They're projecting to supply just a fifth of Apple's modem needs by the 2026 smartphone release. Despite this, they seem unperturbed, even with the highly anticipated iPhone 15 launch (which, spoiler alert, will still sport Qualcomm modems) just around the corner. As for Apple's take on all this? They're keeping mum.
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